The new business model: Competing with partners!

Suddenly, the only way to succeed in the mobile space is to violate the old code of the ecosystem

By , Computerworld |  IT Management, android phones, Google

In the second quarter of this year, Apple reportedly earned 77% of all the profits in the entire phone industry, and did so with only a 6% market share. And tablets are also massively profitable for Apple.

Despite Android's very high market-share numbers, only Samsung is making any money with Android devices.

Both Google and Microsoft have been frustrated not only by Apple's success, but by the fact that they're being held back by lackluster products from their partners. Both companies have separately come to the conclusion that they've got nothing to lose by competing with partners. After all, not competing with them is getting them nothing but dashed hopes and massive problems.

And I believe both companies have proven that they're at least as good as their best partners at making compelling hardware devices.

Besides, where are their partners going to go? With Apple winning all the profits and Android gaining all the market share, there's no viable alternative for OEMs. It's an app economy now, and starting over with a new operating system simply isn't an option anymore.

They've also been victims of their own success. In most of the best markets, the Google and Microsoft brands are far better recognized and appreciated than the brands of their OEM partners.

Millions of consumers out there would rather buy a phone directly from Google or Microsoft than from a lesser brand. Some people would just rather buy hardware from the company that makes the operating system. So if Google and Microsoft want to keep those buyers from turning to Apple, they've got to compete with partners.

It's a new world, and a new market. The "Microsoft model" of never competing with your OEM partners is dead. Now it's "everything goes." Nothing is sacred.

And while this probably isn't great news for the companies that make phones, tablets and PCs, it's great news for consumers.

With Google- and Microsoft-branded hardware coming aggressively on the market, everybody is going to have to work that much harder on quality, design and price. Even Apple

Mike Elgan writes about technology and tech culture. Contact and learn more about Mike at Elgan.com, or subscribe to his free e-mail newsletter, Mike's List. You can also see more articles by Mike Elgan on Computerworld.com.


Originally published on Computerworld |  Click here to read the original story.
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